It is a popular belief that ADR has emerged and originated in the West during the last few decades. But contrary to this belief, such ADR processes like Negotiation, Mediation, Arbitration, Expert Determination, Ombudsman and Med-Arab are as old as Islamic law itself, that is, 1400 years old. All of these have been not only mentioned in the Quran but were practiced since the times of the Prophet, who was a great supporter of the idea of amicable settlement of disputes. Many historic evidences are available in support of this statement.
The numerous tragic events of the past few years, such as the terrorist attacks on the Twin Towers in New York, Bali, Madrid and London, the invasions of Afghanistan and Iraq, the ongoing violence in those two countries and the attack on Lebanon, have created an interest in Islam generally, and more particularly in the phenomenon known as the Islamic revival. One result of this new interest is an awareness of the role and importance of law in the life of Muslims.
‘Islamic law’ (in inverted commas because, as explained below, the term itself is problematic) covers all aspects of human behaviour. It is much wider than the Western understanding of ‘law’, and governs ‘the Muslim’s way of life in literally every detail, from political government to the sale of real property, from hunting to the etiquette of dining, from sexual relations to worship and prayer. Notably for our purposes it also regulates commercial transactions. It follows that the Islamic conceptual framework is quite unlike that of Christianity in which law is secular. There is no Christian law of contract, for example, no Christian law of property, whereas bodies of law dealing with such matters do exist in the shari’a. So, although it would make no sense to refer to ‘Christian commercial law’, it is meaningful to speak of ‘Islamic Commercial Law.
A look at ADR as a whole in Islamic law and also at various ADR processes individually, brings out certain peculiar features which grant an individuality to it in the Islamic system of law. Let these features be stated here first before their explanation which is given later.
1. A religious sanctity attaches with the ADR processes in Islamic law because of their origin in the Quran and the Prophetic approval given to these. The sense of obedience that the Quran and Sunnah (sayings, doings and tacit approvals of the Prophet) produce in Muslims, make adherence to ADR a divine obligation, elevating ADR to the higher pedestal of spirituality that demands submission.
2. The support given to the idea of amicable settlement in Islamic law is so all pervasive that it is allowed in every situation except where it makes a thing haram as halal and halal as haram, that is it is allowed except in situations where it tends to make a “prohibited” as permitted” and vice versa. This idea covers judicial proceedings too, requiring the qadis to go on striving for settlement during the entire course of judicial proceedings.
3. Amicable settlement of a dispute which is already put to arbitration has been made a moral duty of the parties as well as the arbitrator.
4. Amiable Composition is freely allowed, empowering an arbitrator to use his sense of fair play, justice, equity and good conscience in making the award.
5. Parties to an arbitration agreement are allowed to revoke it at any time before award is given.
6. Future disputes are not allowed to be covered by an arbitration agreement in Islamic law, which maintains a “wait and see” attitude, that is, since a dispute may or may not arise, so what is the hurry; once it arises, the parties may agree to settle it by arbitration.
7. Expert determination comes in the form of fatawa of muftis. As fatwa is non-binding, verdict of a jurist consult of great religious standing in the society, on a disputed point carries the stamp of wisdom and religious piety, which compels a more ready compliance than the verdict of a ‘mere’ expert.
8. Ombudsman in Islamic law is Muhtasib, whose office is mentioned in the Quran and the first two ombudsmen that of Makkah and Medinah, were appointed by the Prophet himself. Muhtasib serve towards dispute resolution and dispute avoidance.
Whatever has been stated above serves as the basis of the claim regarding the novelty, posterity and religiosity of ADR processes in Islamic law. Now, let us make a brief examination of each of these points.
Religious Sanctity Attaching with the ADR Processes in Islamic Law
Shari’ah or Islamic law is not only law but a code of life for the Muslims encompassing his entire life from the cradle to the grave. The provisions of this law are either revealed (Quran) or based on the Prophet’s Sunnah, (saying, doings or his tacit approvals), or jurist-made. The first of these two, that is, those which are based on the Quran or Sunnah are regarded as the most sacred and therefore most compliance-worthy. As the ADR processes in Islamic law are based on the Quran and Sunnah, so a religious sanctity demanding unquestionable compliance comes to be attached with it, conferring on it a status which is unique and unparalleled among the legal systems of the world. Once told of the real origin of a particular ADR process, a Muslim need not be convinced any further of its practical worldly usefulness; he will comply, regarding it as a religious commandment.
It is clearly stated in the Quran that “this is a Book which (Allah) has revealed as a blessing: so follow it and be righteous, that ye may receive mercy”. A Muslim again comes across in the Quran such verses which tell him about objects and benefits of the divine revelations. For example, Quran says: “Verily in this (Quran) is a message for people who would (truly) worship Allah”. And describing the objective of Shari’ah, Quran declares: “O mankind, a direction has come to you from your Lord; it is a healing for the ailments……and guidance”.
About the sanctity of the Prophetic pronouncements, we have a declaration from Allah Himself in the Quran that “Nor does he (i.e., the Prophet) say of his own desire. It is no less than inspiration sent down to him”
Sunnah of the Prophet has become a source of inspiration for every Muslim and a pillar, second only to the Quran, on which rests faith and life of a Muslim. No wonder, a Muslim always turns to the Quran and Sunnah for answers to his every problem.
The path laid down in the Quran is to be followed by a Muslim, as commanded by Allah in the Quran:
“Verily, this is My Way leading straight: follow it; follow not (the other) paths: they will scatter you about from His (great) Path. Thus doth He command you, that ye may be righteous”.
The Islamic literature is full of such writings based on Shari’ah, which explains to
Muslims the importance of adhering to the Quran and Sunnah. It is therefore correct to say that to adopt and practice ADR processes is like a religious or sacred obligation for a Muslim. Once he becomes aware that these are based on the Quran and Sunnah. Today, unfortunately, a majority of Muslims are unaware of this fact. Quran, Surah Al An’am (6), ayat 155 [Abdullah Yusuf Ali’s translation] Quran, Surah Al Anbiya (21), ayat 106 Quran, Surah Yunus (10), ayat 57 Quran, Surah Al Najm (53), ayat 3-4 See Abdur Rahman I. Doi, The Islamic Law, (Ta Ha Publisher, London, 1984), pp. 48-49.
The All Pervasive Support that ADR Finds in Islamic Law
A famous letter which the second caliph of Islam – Umar bin Khattab – wrote to Abu Musa Al-Ash’ri after appointing him as a qadi (judge) contained rules to guide him in deciding cases. One of these rules spelled out the wide span of coverage of amicable settlement of disputes. The exact words of Umar are:
All types of compromise and conciliation among Muslims are permissible except those which make haram (unlawful) anything which is halal (lawful), and a halal as haram. This principle is directly based on the saying of the Prophet that “if somebody innovates something which is not in harmony with the principles of our religion, that thing is rejected. In fact the original support that the Quran gives to the peaceful settlement of disputes forms the basis of the widespread support that the idea finds among Muslim. Forexample, the Quran says:
“The believers are but a single brotherhood, so make peace and reconciliation (sulh) between two (contending) brothers; and fear Allah, that ye may receive mercy.
The Quran was here repeating the same thing it already stated in another ayat of the same verse, which is in the following words:
“If two parties among the believers fall into a quarrel, make ye peace between them…..with justice, and be fair: for Allah loves those who are fair (and just).
The Prophet was so supportive of the amicable settlement of disputes that he is reported to have expressed his readiness to condone the use of an exaggeration or mis-statement if it is for the sake of sulh (peaceful settlement). The hadith is as follows:
“Narrated Um Kulthum bint Uqba that she heard Allah’s Apostle
(P.B.U.H) saying ‘He who makes peace (sulh) between the people by
inventing good information or saying good things, is not a liar”.
This support is unique in the sense that it is not found in any other legal system, except to some extent in the present Chinese Constitution and the teachings of Confucious.
Quran, Surah Al Amin (6), ayat 153 The letter is still preserved. For its authenticity, which is established with carbon dating process, see, D. D. Margolith, “Omar’s Instructions to the Qadi”, Journal of Royal Asiatic Society, (1910), p. 307 at 311- 312; Asif A. A. Fyzee, A Modern Approach to Islam, (Lahore, 1978 ed. Of the original Indian Edition), pp. 41-46; Mahmood A. Ghazi, Adab al Qadi, (Urdu) 2nd ed. (Islamabad, Islamic Research Institute,
The Shari’a: Development and Eclipse
The question is perhaps best answered by a brief historical overview. The Prophet Muhammad received his first divine message in approximately 610 AD, having up to that date been a highly respected merchant and arbitrator. The message was followed by other revelations, which were gathered together after his death in the collection now known as the Koran, literally ‘reader’, from the root qr, to read. The Koran contains a considerable number of verses with legal significance, but is far from being a comprehensive code. It is supplemented by accounts of the Prophet’s words and deeds, his practice or sunna, recorded in short narratives called hadith, the English translation of which is ‘Tradition’. Even this combination, though, does not provide enough detail to deal with all commonly occurring problems, so the jurists devised rules to fill the gaps using various techniques, notably qiyas (analogy) and ijma (consensus; at first that of the whole community, then that of the jurists). Various other concepts were of relevance, of these urf (custom) was of great significance in commercial transactions.
One concept in particular, ijtihad should be mentioned here. Literally effort, in a legal sense it can be defined as ‘independent judgment in a legal or theological question, based on the interpretation and application of the [sources of the shari’a], as opposed to taqlid [following established rules and doctrine]’. In other words, it is a human activity which interprets the will of Allah as manifested in the Koran and the Sunna by the use of established juristic techniques. That activity can only be properly undertaken by someone with a deep knowledge of the shari’a, someone who is ‘mujtahid’. It is also used to denote creativity in the shari’a, as in the (now somewhat discredited) idea of the ‘closing of the gate of ijtihad’, and more especially in recent time, the adaptation of the shari’a to modern conditions.
The law which emerged was ‘the law of the body politic but it was to a significant extent devised, and almost entirely managed and interpreted, by jurists working within madhahib (singular madhhab, rendered in English as ‘school’). The madhahib were very largely independent from the ruler who was, in principle and usually in practice, subject to the law, not its generator or controller. Never could the Islamic ruling elite, the body politic, determine what the law was. Indeed, the body politic was regarded as corrupt. If Islamic law had represented to Muslims the best of religion and religious life then the state stood for the worst of worldly temptation [and] corruption. Naturally, interaction and accommodation did occur between the jurists and the ruler but nonetheless the independent and dominant position of the shari’a do constitute a major difference between it and the modern Western idea of law.
On the commercial side, the Muslim conquests created a vast area in which and out of which a great deal of trading activity took place. It was crossed by important trade routes and, for most of the very long period of classical Islam, there was a favourable economic environment. Industry was developed, manpower consisted of free workers, many goods were produced for export and large quantities of coins were in circulation. Gold from the Western Sudan came into the Muslim world, and circulated freely and there was: intense [banking] activity’, in which bankers: ‘performed all banking operations: the exchange of money, loans, and the sale of assignments of credit. As a consequence, the jurists developed a system which, it seems, (although, as we shall see, the issue is disputed) served the needs of participants well. However, the Muslim world was eventually overtaken by the West in areas such as technology, warfare and commercial techniques. This new superiority was forcefully brought home by a long series of events, including notably the conquest of Egypt by the French in 1798, the European domination of trade (symbolised for many commentators by the Treaty of Balta Liman in 1838 between the United Kingdom and the Ottoman Empire) and generally the political domination of the region by European powers.
One of the consequences was a wish to ‘modernise’, in other words to imitate and adopt those ideas and institutions which seemed to have given Europe the advantage. The modernisation movement led to the shari’a being ‘abandoned with astonishing speed and completeness’ in all areas except family law; shari’a commercial law disappeared from almost the entire region, the one exception being, for a considerable period, the Arabian peninsula and, more recently, Saudi Arabia alone, and Western commercial law was adopted in its place.
The full history of the adoption, involving notably the separation of commercial law from other legal topics, has yet to be written. In particular, commentators still argue about ‘why the reformers looked to Europe rather than build on pre-existing shari’a traditions’, but it seems that Napoleon brought with him to Egypt, by way of an unthinking assumption, the French idea of separating commercial and non-commercial law, and that special courts were set up to deal with commercial disputes.
The influential adoption by the Ottoman Empire in 1850 of large parts of the French Commercial Code was made as part of a long and complex secularisation process in which the following factors, inter alia, seem to have played a part:
- European dominance of trade;
- The desire of European merchants to avoid local courts and local law;
- The perception that an obligation to use the shari’a disadvantaged local merchants as against their European counterparts, who could use Western law, which was viewed as more efficient;
- The practice of European traders of using the French Commercial Code as a kind of customary law to aid the resolution of their disputes;
- A familiarity with the idea and practice of secular legislation in certain fields;
- The influence of the Ottoman elite, who stood to gain from trade with Europe, and the governmental desire to please them; and
- A perception that commercial matters were of less religious significance than, say akhlaq (morals), a perception which may have been influenced by the Egyptian experience.
However this may be, what is certain is that major parts of the French Commercial Code 1807 were imported as the Ottoman Commercial Code 1850. Subsequent developments in state law followed the pattern of a divide between commercial and non-commercial matters, This format was the progenitor of the basic attitude towards commercial law, and its un-Islamic separation from civil law seen in the legal systems of many other countries such as Egypt, Iraq, Libya and Kuwait. In drafting the civil codes of these countries, the approach of the noted Egyptian jurist, Dr Abd al-Razzaq al-Sanhuri, even in his second, more ‘Islamic revival’, phase of drafting ‘was premised on the view that Shari’ah cannot be reintroduced in its totality’.
WEHR, H and COWAN, JM (1976).
On the ‘closing of the gate of ijtihad’, see HALLAQ, WB (1984).
HALLAQ, WB (2004B), p. 195.
Id, p.204. It must also be said that there was a symbiotic relationship between the ruler and the law which was ‘constantly negotiated’. Id, p. 187. On the relationship between law and politics generally, see id, Chapter 6. The Ottomans did enact secular laws, but they did not concern the core of the shari’a: see generally MARDIN, E (1955).
The Significance of Shari’a Commercial Law Today
At this point, the non-Muslim reader with no specialist interest in Islamic studies might wonder whether she should carry on reading. If shari’a commercial law effectively disappeared, why be concerned with it? Until recently, such a view would have been justified for nearly all jurisdictions and, indeed, few people took an interest in the subject. However, the Islamic revival has effected very significant changes. Perhaps the most striking manifestation of the new situation is the growth in Islamic finance and insurance, a growth which has recently accelerated as a result of the steady, and recently quite dramatic, rise in oil and gas prices over the last decade or so.
The subject is also of considerable significance as a result of the islamisation of state-based law. Despite the fact that only non-commercial law is islamised, and commercial and non-commercial law are formally distinct, it is not possible to achieve a total isolation of commercial law from its environment. For example, in the UAE, which has a split system, the fundamental law is the Civil Code, which is based on the shari’a. The Commercial Code is a set of variations from, and additions to, the Civil Code. So the Commercial Code is subject to shari’a influence. Significant provisions include Art 1 (means of filling gaps in legislation), Art 2 (interpretation), Art 3 (public policy), Art 200(1) (legality of contractual object) and Art 96 (certainty). In addition, the Civil Code includes bodies of rules relevant to commercial matters, but drawn from the shari’a. Examples include the general law of contract, the law of property, the law of traditional (non-bank) guarantees, the law of security over movables and the law relating to the transfer of rights. The commercial aspects of the shari’a cannot, therefore, be ignored.
And even if the law has a Western appearance, it may be interpreted in a shari’a manner. One example can be found in the law of agency:
‘an agency made for the mutual benefit of the parties’ is often transformed in practice into a permanent form of partnership between the principal and his agent, thus explaining the local sensitivity and social stigma attached to termination of agencies. The archaic Islamic notions of dar al-Harb and dar al-Islam are resurrected when the relationship between principal and agent breaks
down or is threatened: a deeply rooted hostility beyond a mere commercial dispute could then emerge. The distance between the local agent/distributor and the foreign principal/manufacturer is not merely geographical: it is a cultural gap which cannot be bridged without some knowledge and appreciation of Islamic law and the Muslim mind.
In addition, shari’a commercial law might be relevant in the field of international legal ‘harmonisation’, for example if Muslim-majority states wish to conform to the shari’a when entering into international harmonisation conventions, or changes required by such conventions impact upon domestic law in a way which is unacceptable from the point of view of the shari’a; an example of this problem may well occur in Saudi Arabia as a result of her accession to the World Trade Organisation.
The topic is also of considerable intellectual interest as an example of a non-state legal system which seems to have worked effectively and, as seen above, reconciled the demands of religion and morality with the needs of commerce in a way which differs from both civilian and common-law models.
On secularisation, see ASAD (2003), Chapter 7; on legal reform generally, ANDERSON, N (1976), -the Ottoman experience is dealt with at p.15- and CASTRO, F (1985). Anderson draws attention to the importance of commercial and penal law reform: ‘a fundamental change of attitude was inherent even in [the early commercial/penal law] stage of the
Settlement is Embedded in Arbitration
One of the discussions among the early Islamic jurists was regarding the meaning to be given to arbitration. Should it be considered as an attempt at ‘conciliation’ or something akin to ‘judicial proceeding’ where award is binding as a judgment. The Hanafis and Shafiis favoured the first view, while the Malikis and Hanbalis favoured the later view. During the course of centuries, a synthesis of the two views evolved the law and it stands some where in the middle. That is, it is a duty of the parties and the arbitrator to strive for the settlement during the entire course of arbitral proceedings, if no settlement comes through, then the award given by the arbitrator is binding, but only if ratified by a qadi (judge).
This is a very healthy attitude, because the aim of arbitration is to settle a dispute and not to fight a legal battle. A settlement is always preferable over an imposed award.
Amiable Composition Comes Within the Inherent Powers of an Arbitrator
Amiable composition is a principle which allows the arbitrator to take consideration his own sense of fair play, justice and equity in making the award. Islamic law of arbitration allows it, so also the civil law, but common law rejects the concept and compels the arbitrator to follow the law strictly, even if it results into inequity and unfairness. The principle in Islamic law is based on a Quranic verse which says:
“Allah doth command you
To render back your Trusts
To those who, they are due;
And when ye judge
Between man and man,
That ye judge with justice…..”
According to Abdul Hamid El Ahdab, a leading Arab authority on arbitration in Islamic law,
“The prevailing opinion in Moslem law derived from the (above) text is that arbitrators must settle disputes according to the rules of fairness and with respect to the public order. Their position is rather close to that of the ‘amiable compositieur’ in, say, French law, who has to settle a dispute in an analogous spirit to that which the parties would have had, had they been able to agree on a compromise. However, judging fairly does not mean that the arbitrator does not have to apply the rules of Muslim law when the legal principles underlying the disputes are covered by these rules. Should no such rule exist, fairness guides the arbitrator in looking for the solution……The arbitrator must also take into account those principles in commercial matters, which (Al Ghazali in his Ihya Ulum al- Din, vol. 2, p. 79ff) has derived from the Quran and Sunnah under the heading of ‘Good conduct in commercial matters’. These principles help the judge or the arbitrator when a (strict) direct implementation of the contractual provisions would seem unfair (due to change in economic circumstances and personal situation of each party), rendering the performance of contractual obligations unduely burdensome.
The recognition of the principle of amiable composition in the Islamic law of arbitration nearly a thousand years ago, well before its adoption by the French law, or its recent adoption in the UNCITRAL Model Law, due to its humane nature and logical justification, is a unique feature of the Islamic law of arbitration. The arbitrator under Islamic law does not need an express written authorisation from both the parties to use amiable composition, as required in the UNCITRAL Model Law.
Lot of Problems Are Avoided by Not Allowing “Future” Disputes to be Arbitrated
According to Article 1847-1850 of the Majallah Al Ahkam Al Adliyyah (Ottoman Civil Code), which is based on the Islamic law, one of the requisites of a valid arbitration agreement is that the dispute to be arbitrated must have already arisen. Future disputes cannot be arbitrated. Because of the uncertainty arising out of the contingency that a dispute may arise or may not arise gives rise to gharar, a principle of Islamic law which strikes down any provision which is subject to an uncertainty. This is why in Islamic law, an arbitrator must be appointed by name. The attitude of Islamic law is: wait and see. Let the dispute arise. If parties at that given time are mutually agreeable to refer the dispute to arbitration, they may enter into an agreement, name the arbitrator and start the proceedings. In case of future disputes, however, there may occur a very long gap between the time of entering into the agreement and the arising of the dispute. Meanwhile, either party may lose his zeal for arbitration, yet he is legally ‘forced’ into it with counter productive consequences. This way, the prohibition imposed on the arbitration of future disputes appears to be prudent. Sacrificing a little convenience may open up the possibility of big gains.
A Very Special Kind of “Expert Determination” is Provided in the Form of Fatwa of Mufi
“Expert determination” is an ADR process in which the parties to a dispute seek the expertise of an expert in making a neutral evaluation of the dispute and pronounce an assessment of the relative merit of the cases of both parties. The assessment is not binding but advisory in nature. Yet, keeping in view the knowledge of the expert and his neutrality parties tend to accept the assessment as binding and settle their dispute accordingly. Fatawa given by the Muftis closely resembles with expert determination. Fatawa in Islamic law are non-binding evaluative opinions given by a Mufti (juristconsult), regarding a specific issue affecting the whole of society (eg. birth control, etc) cloning, transplantation of human organs, etc) or a specific individual problem affecting only two a parties (eg. a business dispute, matrimonial problem, testamentary disposition, ect). Not everyone can act as Mufti, except those who have the same qualifications as a qadi.
Islamic history is full of cases in which thousands of problematic issues and disputes were referred to Muftis and the answers given by them constituted a collection of fatawas. In fact, fatawa have become an integral part of Islamic legal history, both past and present. The earliest collection of Fatawa known as Kitab Al Nawazil was compiled by Abu Layth al Sumaqandi, who died in 983 AD. And the latest collection is Fatawa Abu Zahra published from Beirut in 1998. In many countries like Malaysia, there are government constituted Fatawa Committees to give verdicts on matter of general interest for every Muslim. In still other countries like India, there are Dar ul Ifta constituted by the religious parties to give fatawa on voluntary basis. These have helped in resolving thousands of disputes among Muslims.
The religious undertones of ADR and certain of its peculiarities have made it unique among the legal systems of the world. Its vast coverage is difficult to be matched by any other legal system, so also the readiness of persons professing Islam to submit themselves to the idea of amicable settlement of disputes.
It is high time that the true nature of ADR shall be explained to and popularised among Muslims. The culture of litigation imposed on Muslim societies during the colonial days must be replaced by the Islamic ways of amicable settlement of civil disputes, then gradually extend it to criminal disputes, like qisas (retaliation).
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